Palo Alto residents expecting optimistic predictions regarding
California's energy crisis were disappointed last week, as local
officials said the worst may still be to come.

"The energy situation, I would define, is grave," John Ulrich,
director of the Palo Alto Utilities Department, told a standing-room
crowd at the City Council chambers last Wednesday.

The city called the meeting to inform its customers of the current
energy crunch and what the future might bring for them regarding
power and gas supply.

"This is a burning issue," Ulrich said. "Hopefully it is short
term."

He said the rolling blackouts that hit the city more than a week
ago was "something we don't like to do. We go through a lot of trauma
when something like this happens. It puts stress and strain on everybody."

Although Palo Alto's rates are lower than PG&E's because the city
had the foresight to purchase power and gas on long-term contracts,
Ulrich said "the times are changing. Those are the facts we have
to live with."

"There will be an impact on Palo Alto," he told the crowd. "It
may be rolling blackouts need to happen."

Gas prices have gone up due to weather conditions, demand, and
use at electric generation plants. Gas rates have gone up 100 percent,
even though the city has held the line on passing the costs to its
customers. Ulrich said he hoped those prices would drop, but he
still urged conservation.

However, there will be a rate increase of 25 percent for gas in
April and another rate increase--between 25 and 35 percent--in July.

Electricity will also see a rate increase in July amounting to
20 to 30 percent. The exact percentage increase can't be calculated
now because "there are too many uncertainties," Ulrich said.

Another problem no one has looked at is available drinking water.
A drought is being predicted for this year, he explained, and the
water supplied to the city by San Francisco will be limited because
of renovation work on the Hetch Hetchy water supply system this
summer.

"There will be a rate increase because of that," Ulrich said.

Emergency services, including hospitals and 911, he said, would
not be impacted by rolling blackouts. Police watch commanders and
fire battalion chiefs have the authority to order power restored
to areas where there is an emergency. Ulrich said if that were to
occur, the next block on the blackout list would be impacted.

"We do have a contingency plan for major intersections," Pat Dwyer,
Palo Alto police chief, told the audience. Because of the limited
number of police officers available, "there will be intersections
that will not be covered. You should treat it as a four-way stop.
Railroad crossings and school crossings are our two top priorities,
and we will respond to a crime in progress."

Ulrich's major concern is the supply of gas. While the city has
a contract for the supply of gas, it comes over PG&E pipelines.
Should PG&E default on paying its bills, less gas would be sold
to the utility, which would reduce the amount of pressure in the
pipes and make delivery to Palo Alto difficult, if not impossible.

Should the gas flow stop it would create a problem for the city.
"It would take weeks, if not months, to relight all the pilot lights
in Palo Alto," Ulrich said.